CAS's neutrality questioned (part 2)

There is perhaps no need to panic straightaway as far as the Olympic Movement is concerned. An appeal in the highest court in Germany, which legal experts have forecast, should bring out more clarity on the matter even if the German skater re-establishes her claim for damages.

Since the Munich verdict would be recognized and enforced in the whole of European Union (EU) comprising 28 countries including the UK, France and Italy, apart from Germany, there should of course be very little chance of the ISU dismissing it as “we can’t be bothered”.

The ISU and some 60-odd International sports bodies including the IOC are based in Lausanne, Switzerland which is not part of EU but has integrated many of EU laws into its laws and rules. Only recently Switzerland had toughened financial laws dealing with sports bodies and sports administrators.

What kind of impact the Munich court ruling can have on the IOC and the rest of the Olympic Movement is to be seen only.

This is not the first time CAS’s neutrality had been questioned by a civil court. Being based in Lausanne CAS is governed by Swiss laws and its decisions, if there are valid legal grounds for a review, are normally appealed in the Swiss Federal Tribunal.

This is perhaps the first time, however, that a ruling by a civil court_not the highest in that land_may impact CAS considerably and can also have consequences for the rest of the sports world.

Formation of CAS

Formed in 1984, with the late Senegalese Judge of the International Court of Justice, Judge Keba Mbaye, as its chair, CAS was a court funded entirely by the IOC and thus lost some of its credibility in its early years.

In Feb 1992 a German horse rider, Elmar Gundel, was penalised by the international Equestrian Federation as his horse tested positive and he was suspended. Gundel appealed before CAS which upheld the decision of the FEI but reduced the rider’s sanction from three months to one month. Gundel took the case up to the Swiss Federal Tribunal, questioning CAS’s legitimacy, and argued that it was not an independent court to give judgements like the one given in his case.

The SFT, the Supreme Court equivalent of that country, dismissed his appeal and ruled in its judgement on March 15, 1993, that CAS was a true court of arbitration.

Not so independent

However, the SFT also noted in its judgement the fact that CAS was financed almost exclusively by the IOC, the IOC was competent to modify CAS rules, and the IOC and its president had the power to appoint members of the CAS. These factors, the court noted, would have been sufficient to call into question the independence of CAS had the IOC been one of the parties in the case (German rider’s) before it.

The message was clear. CAS had to shed its dependence on the IOC. In November 1994 the ICAS was created to look after the functioning and financing of CAS. Not until May 2003 was the new structure of CAS put to test when two Russian cross-country skiers, Larissa Lazutina and Olga Danilova, challenged a decision to disqualify them from an event at the Salt Late Winter Olympics.

In a detailed judgement the SFT concluded that CAS was not “the vassal of the IOC” and was sufficiently independent of all the parties that called upon its services, comparable to the judgements of a State tribunal.

The Swiss court noted the widespread recognition of CAS among sports community and stated that there appeared to be no available alternative to this institution.

The German courts in the Pechstein case, as said earlier, have not questioned the need to have an arbitration court for sport in order to resolve disputes quickly and inexpensively. It has only questioned its neutrality in relation to its structure that, in their opinion, was heavily slanted towards the sports associations.

As for the claim for damages for loss of wages and other losses that could be pursued by Pechstein in Germany, a comparison to the ‘Butch Reynolds case’ of 1990 might be in order.

The Butch Reynolds case

American Harry ‘Butch’ Reynolds, former world record holder in the 400 metres, was suspended by the IAAF (then International Amateur Athletic Federation, now International Association of Athletics Federations) in August 1990 for two years for a steroid violation.

Reynolds sued the IAAF in the Southern District Court, Ohio, but was told to go through administrative remedies laid down in the sports organisations’ rules. A USA athletics federation (TAC) panel to which he later appealed, found that there were doubts about the validity of the drug tests. The IAAF refused to accept the ruling.

Reynolds continued to sue the IAAF in Ohio Federal court for defamation, breach of contract and loss of wages. By then he had failed in his bid to compete in the Barcelona Olympics though, through a series of court orders, Reynolds had succeeded in participating in the US Olympic trials.

He was chosen eventually as an ‘alternate’ in the relay but the IAAF refused to allow him to compete in the Olympics. The TAC finally removed his name from the Olympic roster.

On September 28, 1992, Reynolds filed a supplementary complaint with the district court. After the IAAF and the TAC refused to appear for the proceedings, the court awarded $27.35 million as damages to the athlete including treble punitive damages of more than $20 million.

The court found that the IAAF “acted with ill will and a spirit of revenge” towards the athlete and suppressed evidence and held out threats against Reynolds and fellow athletes and eventually extended his suspension by another four months for having competed in the Olympic trials during his suspension.

On Feb 17, 1993 Reynolds began garnishment proceedings (to recover the money that the IAAF was refusing to pay despite court orders) against four corporations with which the IAAF had connections when he found that the IAAF was refusing to recognize the district court’s decision. The IAAF responded at one of the hearings at this stage and later filed motions arguing that the court lacked personal jurisdiction and subject matter jurisdiction. The Ohio court dismissed all pleas.

Federal court ruling

The IAAF then filed an appeal with the US Court of Appeals (Sixth Circuit), citing lack of jurisdiction of the district court.

In its judgement on May 17, 1994, the three-judge bench of the Federal court ruled that the district court indeed did not have jurisdiction.

“ In conclusion, we do not believe that holding the IAAF amenable to suit in an Ohio court under the facts of this case comports with "traditional notions of fair play and substantial justice." …The IAAF stated in its brief and at oral argument that it will not challenge the jurisdiction of English courts to determine the validity of the London Arbitration award if Reynolds seeks to have it set aside in the courts of that country.

“Our decision renders the IAAF's recusal motion moot.

“The district court abused its discretion by denying the IAAF's Rule 60(b)(4) motion for relief. The judgment of the district court is reversed. Upon remand the district court will dismiss this action for lack of personal jurisdiction over the IAAF,” the court ordered.

Supreme Court refuses to intervene

Reynolds did not rest there! He went up to the US Supreme Court which eventually refused to hear his appeal.

On his return, Reynolds won two successive silver medals in the 400m at the World athletics championships and was also part of the US relay teams that took the gold in 1993 and 1995 World championships.

The Pechstein case is of course different, especially since an EU country is involved and the ISU could possibly be concerned about the implications of a an award for damages in case such an award was granted.

 The jurisdiction part could however be relevant. From 1994, when it revised its rules, to date, CAS has rendered decisions that have gone against sports associations including two famous ones that went against rules framed by the IOC and the British Olympic Committee to have extended bans for athletes turning up ‘positive’ for dope in Olympics

But the Pechstein ruling has set off an interesting debate.

“Claudia Pechstein case puts Sports supreme court on trial”, says the headline of an excellent article by Matt Slater on BBC Sport.

Dutee Chand case coming up

Of immediate interest to India could be the March 23-26 hearing of the Dutee Chand appeal in CAS against her exclusion from women’s events on the basis of the IAAF’s hyperandrogenism policy.

The IAAF rules, based on the levels of testosterone in a female body, apart from an assortment of tests and clinical examinations, have been challenged by the Odisha sprinter with the support of the Government of India and its agencies.

This was going to be a huge challenge for CAS itself in the ordinary circumstances. With the backdrop of the Pechstein case, this has surely become more delicate than before. The IAAF rules apart, the IOC rules on hypernandrogenism, similar to the IAAF rules to a great extent, would also be in focus though Dutee has not named the IOC as a respondent.

Will the Indian athlete be able to plead ‘lack of independence’ of a CAS panel, like in the Pechstein case, and approach an Indian court in case she loses her appeal before CAS? A hypothetical question at this moment, but who would have thought that a CAS verdict would be rejected by a Munich court?

 (concluded)

CAS's neutrality questioned (part 1)

The recent ruling by a German court in a case involving speed skater Claudia Pechstein has left a question about the 'neutrality' of the Court of Arbitration for Sport (CAS), the highest court in sports litigation. The legal community  is abuzz, the media has started speculating CAS's future in the present format. A two-part piece here brings details and attempts to explain the issue.

The foundations of the Court of Arbitration for Sport (CAS) have been shaken by the recent judgement of a Munich court in an appeal filed by multiple Olympic medallist Claudia Pechstein.

In what could be of far-reaching consequences in sports arbitration, especially in matters of doping and other disciplinary procedures, the Munich appeal court (Oberlandesgericht München) ruled that there were structural imbalances in the composition of the International Council of Arbitration for Sport (ICAS) and thus in the CAS panels that could be deemed favourable to the sports associations.

The Munich court consequently ordered in its judgement on Jan 15, 2015, that the CAS verdict in relation to a doping appeal by Pechstein could not be acceptable as per German ‘competition law’ and the New York Convention of 1958, thus opening up a fresh avenue for the German skater to claim damages from the International Skating Union (ISU) in a German civil court.

In a nutshell, the Pechstein ruling has questioned the ‘neutrality’ of the ICAS and CAS, leading to a situation where individual athletes, clubs and officials from other countries could approach civil courts in their own countries to resolve doping issues and other disputes from a long-term perspective. At least in theory that could be possible.

It is too early of course to say whether the Munich court ruling is here to stay, so don’t jump to quick conclusions. Legal experts do expect the ISU or any other competent authority to go in appeal to the highest German civil court, the Bundesgerichtshof (BGH), which could be expected to pronounce a final verdict on this drawn-out drama that began unfolding in 2009.

The Pechstein case

What is the Pechstein case?

Background and brief analysis are available at the Asser International Sports Law Centre 

The case, as explained in the above article, relates to a ‘blood passport’ finding of the German speed skater in 2009. She was suspended for two years by the ISU in July, 2009. Pechstein, owner of nine Olympic medals including five goldis the most successful Olympic speed skater, male or female, of all-time. She is also the most successful German Winter Olympian ever.

Pechstein’s was the first case to be determined under the biological passport system introduced by WADA in 2009 in which an athlete’s biological variables over a period of time are monitored rather than the blood tested to find out the doping substance or method.

Pechstein was banned for two years by the ISU, leading to a series of legal battles that eventually culminated, six years later, in the recent judgement by the German court. In between she approached CAS which dismissed her appeal in November 2009. She knocked at the CAS doors again next year, unsuccessfully, as she tried to compete in the team skating events of the Vancouver Olympics with an appeal to the CAS ad hoc division.

Pechstein went to the Swiss Federal Tribunal twice and failed on oth occasions. The Swiss court gave its final ruling on September 28, 2010, rejecting the German’s plea. She returned to competition in February 2011, won a bronze in that year’s World Championships in the 5000m race, and almost took a medal in the Sochi Olympics last year.

By then she had filed a petition before a lower court in Munich seeking damages including for loss of earnings of around four million Euros from the ISU. Despite accepting the invalidity of the arbitration clause that forced her to seek justice at the CAS in an arbitration proceeding with the ISU, the Munich court in its order of Feb 26, 2014 held that the res judicata effect of the CAS verdict was to be recognized since the Olympian did not contest the competence of CAS in her appeal. (res judicata is a term used to indicate that the effect of a first judgement by a competent authority was to be preserved if the subsequent appeal was identical in nature or substantially the same.)

She appealed this Munich court decision to Oberlandesgericht München, an appellate court,  which has now given the path-breaking verdict, not only questioning the neutrality of the ICAS and CAS but also providing the skater with an opportunity to seek damages from the ISU.
The Munich appeals court noted that the arbitration clause signed on the 2 January 2009 by the appellant (Pechstein) and the respondent No. 2 (ISU) did not preclude access to the ordinary courts

 "To this end the question whether the CAS, designated by the arbitration clause, can be considered a real arbitration tribunal, despite the fact the parties have no equal influence on its composition, can stay open. The arbitration clause would also be null in that case.

"The arbitration clause is in the present case inapplicable because it goes against

Anti-trust law," the court stated.

Even as it acknowledged the utility of an independent court or arbitration body to deal with cases related to sports, especially doping, the Munich appeal court went by the argument that the composition of the CAS panel had an imbalance in favour of the sports associations.

Monopolistic

The Munich courts concluded that the ISU (and all such international sports governing bodies) were monopolistic in nature, thus ruling out the possibility of a banned athlete competing in any competition and make a living out of the sport.

A rough translation of the Munich court decision in German, provided by the Asser International Sports Law Centre, states “The provisions regulating the selection of the potential CAS arbitrators favour the sports associations in disputes against athletes, thus embedding a structural imbalance that is threatening the neutrality of CAS.”

Though rules have changed from Jan 2014 as far as eligibility to be named on the CAS list of arbitrators are concerned the court apparently took note of the previous set of rules applicable to the German’s case that did not facilitate selection of arbitrators from an open panel.

Moreover, even now, the sports bodies, including the International Olympic Committee (IOC), the international federations and the Association of National Olympic Committees (ANOC), have a large say in the appointment of the 20 members who constitute the ICAS which in turn approves the CAS panel members.

Is there a bias?

 “This disproportionate influence creates the risk that the persons included on the CAS arbitrators list predominantly or even entirely favour the side of the sporting associations over the athletes. This is also true concerning the arbitrators that are not suggested by the sporting association, but are selected in view to protect the interest of athletes or on the basis of their independence, as they are designated by ICAS members chosen by the sporting associations. A balanced influence of the parties on the composition of the arbitral tribunal that would be needed to safeguard its independence is thus not provided. Such a structural deficiency threatens the neutrality of the arbitral tribunal; this is independent of the fact whether the persons included on the CAS list of arbitrators are in any way linked to the sports associations, as this would actually open the possibility to challenge their nomination. Even when the personal integrity of the persons included on the CAS list is not affected, there is a potential risk that arbitrators share the worldview of the sports associations rather than the one of the athletes,” said the order, as translated by Asser International SportsLaw Centre.
Can this lead to drastic reforms in the ICAS and CAS framework? Is this binding on the ISU and in turn will other international federations be forced to cough up money if damages are claimed in litigations in different countries on the same premise as in the Pechstein case? Even in such instances where a final appeal might have been disposed of by CAS?

Is it the beginning of the end of CAS and world-level sports arbitration as has been made out by some observers?

 (continued)

(updated 24 Feb 2015)